Consumers may get a wider choice in international apparel brands with Union finance minister Nirmala Sitharaman proposing to ease local sourcing norms for foreign direct investment (FDI) in single-brand retail. But the move, according to industry sources, could hurt the local manufacturers.
“The mandatory requirement of local sourcing of items for foreign brands investing in India will further be reduced. While this is a boost to FDI, it is contradictory to the Make In India push. The Indian consumer will certainly benefit with more international labels. However, it will hurt local manufacturers,” said Rahul Mehta, president and chairman, Clothing Manufacturers’ Association of India (CMAI).
While the Union Budget has a total provision of Rs 4,831.48 crore for textile sector, there were no major industryspecific incentives announced. Traditional textile artisans and craftsmen will also be nefit from the increased allocation for the development of handloom, handicraft, wool, silk, jute and powerloom sector. “The allocation has also been increased for skilling in textiles, which will benefit the industry in a longer run,” said Sanjay Jain, chairman, Confederation of Indian Textile Industry (CITI).
“The budget allocation has gone down from Rs 6,943.26 crore in financial year 2018-19. We expected more allocation for technology upgradation fund (TUF) against the Rs 700-crore that has been announced because the obligations for the same run into a few thousand crores.,” added Jain.
Certain indirect benefits that have been announced in the Union Budget could help boost consumption. “The 2% interest subvention for MSMEs for incremental and new loans along with the proposal to widen the turnover limit of Rs 250 crore to Rs 400 crore for lower rate of corporate tax at 25% may increase consumption,” said Mehta.
Textile and apparel industry, which employs some 10 crore people in India, also expected more measures to safeguard domestic industry.